Ad-free growth: This business grew to $1m without spending on ads

There is no shortage of ways a small business can choose to splash cash on advertising, but some growing companies say they're barely spending a cent.

"What we do is continually evolving, but from the very beginning the thing that has worked best for us is word-of-mouth," says chief executive of edtech startup Mappen, Danny Ritterman.

Chief executive of Mappen, Danny Ritterman. Mappen has spent around $1,000 on digital advertising and doesn't intend to spend more.

Mappen, which Ritterman runs with three co-founders including his mother Karen Green and brother Mark, is targeted at teachers to help them plan lessons.

Educational providers can use the system to build lesson structures and make sure their work is up-to-date with the current curriculum and best practice.

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The business now turns over more than $1 million but the most the startup has ever spent on advertising is $1,000 on Facebook. The approach was quickly ditched because it ended up costing $30 or $40 to reach each end user.

Resisting temptation

Ritterman says paid ads are always tempting for a new startup like Mappen, but the team has come to the conclusion there are much better ways of building a community around a product.

"It [advertising] feels like an easy fix when you've got a product and the product is good. But the big challenge especially in business-to-business sales is, 'how do I get this in front of people?'"

The startup's growth to more than 300 users across Australia came about through a process that's perhaps more labour-intensive that paying for advertising: sitting down with potential customers one-by-one to make the sell.

"The first dozen schools were schools that we’ve known, and word of mouth through teachers talking to other teachers," Ritterman says.

"Face to face is the best way to engage people over something on this level. And you have to explain the proposition before you can do anything else. And with conversation rates, it's about twice as good as a remote demonstration."

Tracking return-on-investment

Even among businesses that have spent on digital ads in the past, some are finding that it's the activities where you don't spend that get the best return.

Soulopoulos says Mad Paws hasn't had issues with paid advertising on sites like Google and Facebook.

However, the focus is on cutting down on how much it costs to acquire new users. The act of one neighbour chatting to another about their use of Mad Paws can be a more effective way of getting a new client, he says.

"We are building communities, and events are one way of doing that. We throw Australia's largest dog Easter egg hunt, for example. Several thousand pet owners come to that event."

Ritterman agrees that for businesses like Mappen, developing relationships is just a more effective way of securing growth.

"There’s been a lot of leads. Often, we'll talk to schools that are happy with it [the product] and ask if there are any schools in the area that would be receptive for a call."